8 - Glossary

• Types of Units/Shares

  • Accumulation Units/Shares
• Aggregation

  Consolidating a large number of buy or sell orders from retail clients into a single order that can be serviced by the destination firm
• Annual Management Charge (AMC)


  A charge collected automatically from the scheme property of a collective investment scheme, usually defined as a percentage of the assets under management in the fund
• Annuity


  A type of insurance product used to generate an income in retirement. An annuity generally pays a set level of income until the death of the annuity holder
• Authorised Fund Manager (AFM)


  The role defined in the COLL rules as operating a regulated CIS (either the manager of a unit trust or the authorised corporate director of an OEIC)
• Authorised Unit Trust (AUT)


  A unit trust scheme authorised by the Financial Conduct Authority and can be offered for sale to the general public
• Benchmark

  A standard against which the performance of a security, mutual fund, or investment manager can be measured
• Beneficial Owner


  The person or entity who ultimately benefits from the asset
• Best Execution


  The obligation on a firm to achieve the best possible result when transacting on behalf of a client
• Bonds


  Essentially IOUs where the issuer receives money from the initial buyer, pays regular interest, and returns the capital at a future date
• Cash ISA

  A type of ISA that can contain cash deposits and similar assets, with withdrawals permitted without any restriction
• Regulations


  • Client Assets Sourcebook (CASS)
  • Collective Investment Scheme Sourcebook (COLL)
  • Conduct of Business Rules Sourcebook (COBS)
• Capital Gains Tax (CGT)


  Tax payable by the individual taxpayer on gains arising from the sale of securities and other assets
• Central Securities Depository (CSD)


  An entity providing a central point for market interactions in a particular security
• Class Action is a legal device that permits shareholders to group together and seek legal proceedings against a company
• Closed-Ended Fund


  An unauthorised CIS or Alternative Investment Fund (AIF) with a fixed number of shares, traded on an exchange and priced according to supply and demand
• Types of Collective Investment Schemes (CISs)

  • Unit trusts
  • OEICs
• Regulations


  • Collective Investment Scheme Sourcebook (COLL)
• Regulations


  • Conduct of Business Rules Sourcebook (COBS)
• CREST


  Computerised system for the transfer of financial instruments traded on the London and Dublin Stock Exchanges
• Custodian


  A specialised financial institution responsible for safeguarding financial assets
• Defined Benefit (DB) Pension Scheme

  A pension scheme where each member is guaranteed a specific income related to their salary
• Defined Contribution (DC) Pension Scheme

  A pension scheme where each member’s income at retirement is dependent upon contributions made and the performance of the assets purchased
• Defined Contribution (DC) Pension Scheme

  • A pension scheme where each member’s income at retirement is dependent upon the contributions made and the performance of the assets purchased
  • Sometimes known as a Money Purchase Arrangement
• Derivative

  Financial instrument whose value is dependent upon the value of an underlying asset
• Discretionary Fund Manager (DFM)

  • An investment manager that makes the buy-sell decisions without referring to the account owner (client) for every transaction
  • The manager must operate within the agreed-upon limits to achieve the client’s stated investment objectives
• Equities


  • Direct investments in companies
  • Holding shares in a company is the same as having an ownership stake in that company
• Exchange-Traded Fund (ETF)

  • An investment fund traded on a global stock exchange in the same manner as a typical equity
  • The price of an ETF reflects the value of its investment portfolio
• Financial Conduct Authority (FCA)


  The UK regulator overseeing the conduct of retail and wholesale financial business and market regulation for all firms and prudent regulation of all firms not prudentially regulated by the Prudential Regulation Authority (PRA)
• Financial Ombudsman Service (FOS)

  An independent service to investigate unresolved complaints against UK regulated firms
• Financial Services Compensation Scheme (FSCS)


  The UK’s statutory scheme to compensate customers of authorised financial services firms if that firm is unable to honour its obligations to those clients
• General Investment Account (GIA)


  • A type of wrapper which holds all investments that are neither pension fund investments nor the subject of tax restrictions
  • This type of account is usually available to all private individuals, as well as charities, and may be operated in joint names (e.g., married couples or business partners)
• Gilts


  Bonds issued by the UK government
• Group 1 Units/Shares

  • CIS units/shares that the holder purchased in a previous accounting period (and on which any return of capital due has already been effected)
• Group 2 Units/Shares


  • CIS units/shares that the holder purchased in the most recent accounting period (and on which no return of capital has yet been made)
• HM Revenue & Customs (HMRC)

  The branch of the UK government that administers and collects tax from individuals and companies
• Independent Financial Adviser (IFA)


  A financial adviser who selects investments from the complete range of product providers who offer products in the sector in which the adviser specialises
• Individual Savings Account (ISA)


  • A type of investment wrapper created by the government and allowing tax-efficient investment
  • Multiple types of ISA products now exist, each having slightly different rules, with the investor having an annual subscription limit which caps the total value that can be subscribed into ISA products during that tax year
• Initial Charge


  • A charge which may be applied to new investment in a CIS, calculated as a percentage of the price
  • For a dual-priced CIS, the initial charge is included within the offer price; for a single-priced fund, the initial charge would be in addition to the quoted price
• Insured Personal Pension

  A type of personal pension scheme offered by an insurance firm, allowing investors to invest in a set range of investment funds